Rand steady as global markets take a breather

The rand steadied on Tuesday morning, as global markets took a breather after a decent run in the past few sessions.

Equities in particular stood out, with the all share gaining a hefty 4% since Thursday before pulling back slightly.

The better than expected US nonfarm payrolls report on Friday provided a silver lining to the world economy amid early indications that it could be losing momentum.

The political concerns in Italy and Spain had also shifted to the background, helping to lift global sentiment.

With the lull in global markets, market participants are likely to take their cues from SA’s GDP figures, which are out later in the day.

The local economy is likely to have shrunk in the first quarter, undermined by the sluggish performance in mining and manufacturing, economists predict. The two sectors account for 20% of the GDP.

“With events in the world currently in a bit of a limbo, we can see the rand trading sideways in morning trading, but there could be some action with the release of the GDP number,” said TreasuryOne senior currency dealer Andre Botha.

Still, the prognosis for the year still looks broadly positive, with the Treasury expecting the economy to grow 1.5% in 2018 from 1.3% in 2017.

Economists have previously revised their growth forecasts to reflect improved business and consumer confidence under President Cyril Ramaphosa, who has committed himself to reviving the economy and stamping out corruption.

The local bonds were relatively steady in early trade, although off the worst levels reached last week.

The yield on the R186 bond, which shows government borrowing costs, was little changed at 8.585% from 8.555% at its last settlement.

At 10.01am, the rand was at R12.5723 to the dollar from R12.5664, R14.7006 to the euro from R14.6949 and R16.7516 to the pound from R16.7296. The euro was at $1.1694 from $1.1695.